"Factories in our region reported slower growth, easing price pressures, and rising uncertainty in June," Kansas City Fed Economist Chad Wilkerson said in a statement. "Many firms noted concerns about economic conditions in Europe, but only a few had experienced sizeable direct negative impacts to date, and Tenth District factories as a whole still expect moderate growth heading forward."

Employment trends in the Tenth Federal District also softened, with the index declining to 3 from 10 in May. Eleven percent of firms polled said they expected to reduce their workforce, while 22 percent said they planned on hiring.

Production remained mostly positive at 12, a dip from last month's reading, while the volume of new orders was negative for another month, at -7.